After performing exceptionally well throughout the pandemic, Carvana reported that overall sales had dropped for the first time ever. Carvana sales totaled 105,185 for the first quarter, down almost 8,000 from Q4 2021. The results come after the company’s February projections that it would sell more than 550,000 vehicles in 2022.
The company also said its net loss had reached $260 million and its gross profit per unit sold was down $823 year-over-year, ending up at $2,833.
The Wall Street Journal reported Carvana said it will not be “providing financial guidance for the year” due to “rising interest rates, rising fuel prices, and macroeconomic uncertainty—all affecting the used-car market.” The pandemic has also likely affected sales, as labor shortages caused less direct-from-consumer used car purchases and therefore led to lower inventory.
The company was also reportedly impacted by “falling used-car prices, inflation-wary consumers and a declining appetite for its debt.” Increasing prices across all industries may lead consumers to spend their money on other items such as groceries instead of high-priced used cars.
Carvana announced it “expect[s] to better align sales with expense levels through a combination of higher sales and expense efficiencies.”
Shares dropped almost 25% after the announcement. Carvana is planning on acquiring ADESA U.S. soon and will also be selling $2 billion in stock to improve its financial condition. Carvana’s CEO Ernie Garcia III said he and his father would purchase some of this stock.
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